What You Need to Know About Bartering

To beat the bum economy, many people are finding creative ways to swap for the stuff they need and want.

1. It’s the new national pastime. Okay, baseball still beats out barter. But given the economic downturn, many people are reverting to this ancient form of commerce. Craigslist recently reported that bartering activity had jumped more than 80% on the site over the past year. Sites such as BarterQuest.com report a surge in interest, too. BarterQuest, which offers swaps on everything from chef’s services to designer coats, drew more than 100,000 visitors just two months after the Web site launched late last year. The reason? Bartering is addictive -- and fun. Kent Berryman, founder of Swap-It-Now.com, says that once users post one item, they usually offer up more. Plus, says Berryman, “people are used to getting good deals at big-box stores. But now that they don’t have the money, they’re bartering.”

2. You can trade just about anything. Want to upgrade your camera? Online retailer Adorama will quote you a price for your old camera free and cut you a check or offer a credit toward new equipment (go to www.adorama.com and click on “sell used equipment”). Dying to break your car lease? Go to Swapalease.com or LeaseTrader.com, which, for a fee, will match up people who want to unload their leases with people who want to assume them. But don’t stop there. At SwapThing.com, recent trades included a gas clothes dryer for a high-speed table saw, a personal-shopping jaunt for a Nintendo Game Boy and games, and a service swap between a hairdresser and a certified public accountant.

3. Let the barterer beware. Craigslist doesn’t prescreen users. So if you’re looking to swap for a service you really need -- such as baby-sitting -- start by contacting friends and neighbors. Or try a site that verifies the addresses and phone numbers of its users, such as BarterBee.com. BarterBee lets you trade CDs, movies and video games free, and it will post a detailed description of your item for you. But, says Robert Alvin, BarterBee.com’s chief executive, be sure you know what your product or service is worth. “If you list it too high, it won’t move,” he says.

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4. Try a home swap. You can join a home-swap club, such as International Home Exchange Network (www.ihen.com), for as little as $40 a year. For tips on finding the right club, go to KnowYourTrade.com. Chectravel.com offers members added security, such as address-verification services, online exchange agreements and, if problems arise, mediation services ($25 a year; home-exchange insurance starts at $15). Caveat: If you’re hoping to swap on a particular date, start looking for a match as early as possible. Then, once you’ve found someone, keep in touch.

5. Keep Uncle Sam in the loop. If you barter on more than a casual basis, you may be required to report your transactions. The IRS has guidance on its Web site (www.irs.gov), but check with your accountant. If you’re a small-business owner and trade services with another firm or use a barter exchange, such as Barter Business Unlimited (www.bbu.com), you need to pay tax on the value of the goods or services you bartered. The general rule of thumb: If the service you receive is a substitute for business income, you must report it.

Associate Editor, Kiplinger's Personal Finance